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Thursday, 20 October 2011

Permal, a global player in alternate investment management with $23 billion (Dh84.4 billion) worth of assets under management, is seeing growing Middle East interest in hedge fund investments.

Local investors' portfolios are still dominated by regional equities and bonds, but they are now looking to spread risk across asset classes, seeking longer-term returns and greater downside protection. International investments and absolute return funds have been beneficiaries.

"Investors from here, particularly high net-worth individuals, institutional investors and sovereign wealth funds, are showing growing interest in alternate investment strategies. Currently about 20 per cent of our total assets are from the Middle East region," said Isaac R. Souede, chairman and chief executive of Permal Group.

The momentum of the "Arab Spring" has been mesmerising, yet the future is uncertain.

The Middle East and North Africa (Mena) lags behind other emerging markets in ease of doing business and in competitiveness, and it is undeniable that social change must go hand in hand with economic reform.

The Arab world must embrace a reliable path to economic growth. Nurturing an entrepreneurial culture is crucial.

A Swiss bank has become the latest international lender to withdraw from the region as financial companies trim costs in expectation of tougher times ahead.

EFG International,based in Zurich, said it would close its Dubai and Abu Dhabi offices as part of a worldwide cost-cutting effort, ending its presence in the Middle East.

Despite earlier projections that it would be able to benefit from growing Gulf wealth as oil prices and economic growth soared, EFG International found fewer opportunities than it had hoped for, said a spokesman for the bank.

Tunisia, the birth place of the so- called Arab Spring, may stage a faster economic recovery than other countries that witnessed uprisings in the region this year, helped by a surge in bank lending.

Tunisians head to the polls on Oct. 23 to elect an assembly that will write a new constitution after the revolt that toppled President Zine El Abidine Ben Ali in January. The new government may encourage banks to boost lending to support growth, said Chokri Jaoua, head of operational management at Banque Internationale Arabe de Tunisie, the country’s biggest publicly traded bank known as BIAT.

The central bank’s decision to cut its key interest rate twice and slash reserve requirements helped credit grow 10.5 percent in the first nine months of 2011. Egyptian bank credit expanded 3.8 percent in the first seven months, central bank data show, as a breakdown in security and sectarian clashes led companies to scale back expansion plans. In Bahrain, credit will rise 1 percent this year, according to HSBC Holdings Plc. (HSBA)

The Saudi Arabian Tadawul exchange's benchmark index Tasi fell 0.71% to 6,106.74 points. Shares of Kingdom Holding ended unchanged at SR7.25. During third quarter, Kingdom Holding achieved a net income of SR197.7m compared to the net income of SR160m for the same quarter in 2010, representing an increase of 23.6%, and compared to the net income for the last quarter of SR163.5m, representing an increase of 20.9%.

Qatar Islamic Bank (QIB) has reported a 22% jump in its January-September 2011 net profit to QR1.11bn mainly on its robust core earnings and lower impairments on its credit and investment portfolios.

Net income from financing was down 6% to QR1.36bn, while that from investments jumped about nine-fold to QR499.71mn. Thus, its total net financing and investment income rose 24% to QR1.86bn, according to its financial statement filed with the Qatar Exchange.

Net commission and fee income were down 7% to QR200.28mn. Although the bank reported foreign exchange loss of QR14.78mn against gains of QR19.96mn in the year-ago period, its net operating income gained 19% to QR2.05bn.

The cost of insuring Egypt's government debt against default has risen above the cost of insuring Dubai's, a sign of growing concern about political stability ahead of elections scheduled to begin next month. Egypt's credit default swap spreads, which track the amount of money investors would have to pay for protection against a debt default, rose above Dubai's on Tuesday for the first time in about a month, according to a Bloomberg News report.

Dubai's swap spreads have been some of the highest in the region since the onset of the financial crisis forced several big government-owned businesses to restructure debt to avoid default.

"We should never underestimate the importance of the political process, especially in emerging markets," said Plamen Monovski, the chief investment officer at Renaissance Asset Managers.

Dubai's Nakheel has approached banks for a $200 million financing, in its first attempt to tap capital markets in over two years and about a month after it completed a complex restructuring of its massive debt pile.

"Nakheel is approaching banks and discussions with them are progressing well," a Nakheel spokesman said on Sunday.

The indebted developer is now wholly-owned by the Dubai government as part of its former parent Dubai World's debt restructuring.